# GROUP 1 AUTOMOTIVE INC (GPI) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from GROUP 1 AUTOMOTIVE INC's 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1031203/000103120322000007/gpi-20211231.htm
Accession: 0001031203-22-000007
Filing date: 2022-02-23
Report date: 2021-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/GPI/
All MD&A years: /company/GPI/mda/
Next year: /company/GPI/mda/fy2022/ (FY 2022)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Part I, including the matters set forth in Item 1A. Risk Factors, and our Consolidated Financial Statements and notes thereto included elsewhere in this Form 10-K. Refer to Item 1. Business — General for an overview of our operations. Additionally, refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2020 Annual Report on Form 10-K for management’s discussion and analysis of financial condition and results of operations for the fiscal year 2020 compared to fiscal year 2019.

Overview

Our operating results reflect the combined performance of each of our interrelated business activities. Historically, various facets of our business have been directly or indirectly impacted by a variety of supply/demand factors, including vehicle inventories, consumer confidence, consumer transportation preferences, discretionary spending levels, availability and affordability of consumer credit, manufacturer incentives, the COVID-19 pandemic, weather patterns, fuel prices and interest rates. For example, during periods of sustained economic downturn or significant supply/demand imbalances, new vehicle sales may be negatively impacted as consumers tend to shift their purchases to used vehicles. Some consumers may delay their purchasing decisions altogether, electing instead to continue to maintain and repair their existing vehicles. In such cases, however, we believe the new vehicle sales impact on our overall business is mitigated by our ability to offer other products and services, such as used vehicles and parts, as well as maintenance, repair and collision services. In addition, our ability to expediently adjust our cost structure in response to changes in new vehicle sales volumes also tempers any negative impact of such sales volume changes.

Recent Accounting Pronouncements

Refer to Note 1. Basis of Presentation, Consolidation and Summary of Accounting Policies within our Notes to Consolidated Financial Statements.

Critical Accounting Policies and Accounting Estimates

The preparation of our financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the balance sheet date and the amounts of revenues and expenses recognized during the reporting period. Below are the accounting policies and estimates that have been determined to be critical to our business operations and the understanding of our results of operations.

Goodwill and Intangible Franchise Rights

We are organized into two geographic regions, the U.S. region and the U.K. region; each region represents a reporting unit for the purpose of assessing goodwill for impairment. In addition to goodwill, we have identifiable intangibles in the form of rights under our franchise agreements with manufacturers, which are recorded at an individual dealership level.

We evaluate goodwill and intangible franchise rights for impairment annually as of October 31, or more frequently if events or circumstances indicate possible impairment has occurred.

Based on the qualitative test performed for the U.S. and U.K. reporting units in the fourth quarter of 2021, no quantitative test was deemed necessary. No goodwill impairments were recorded on any reporting units during the years ended December 31, 2021 and 2020. The quantitative goodwill impairment test is dependent on management estimates and assumptions used to determine the fair value of our reporting units. Refer to Note 12. Intangible Franchise Rights and Goodwill within our Notes to Consolidated Financial Statements for further discussion of goodwill, including management’s use of estimates and assumptions.

During the year ended December 31, 2021, no impairment was recorded for intangible franchise rights. During the year ended December 31, 2020, we recorded $20.7 million of impairments of intangible franchise rights. As our intangible franchise rights are tested for impairment at the dealership level, any impairments are specific to the performance and outlook of the respective dealership.

Refer to Note 12. Intangible Franchise Rights and Goodwill within our Notes to Consolidated Financial Statements for further discussion of our intangibles, including fair value assumptions.

23

Results of Operations

The “same store” amounts presented below include the results of dealerships and corporate headquarters for the identical months in each period presented in comparison, commencing with the first full month in which the dealership was owned by us and, in the case of dispositions, ending with the last full month it was owned by us. For example, the results for a dealership acquired on August 15, 2020, will appear in our same store comparison beginning in 2021 for the period September 2021 through December 2021, when comparing to September 2020 through December 2020 results. If we disposed of a store on August 15, 2020, the results from this store would be excluded from same store results beginning in August 2020 as July 2020 was the last full month the dealership was owned by us. Same store results provide a measurement of our ability to grow revenues and profitability of our existing stores and also provide a metric for peer group comparisons. For these reasons, same store results allows management to manage and monitor the performance of the business and is also useful to investors.

We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our underlying business and results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our current period reported results for entities reporting in currencies other than USD using comparative period exchange rates rather than the actual exchange rates in effect during the respective periods. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. Additionally, we caution investors not to place undue reliance on non-GAAP measures, but also to consider them with the most directly comparable GAAP measures. Our management also uses constant currency and adjusted cash flows from operating, investing and financing activities in conjunction with GAAP financial measures to assess our business, including communication with our Board of Directors, investors and industry analysts concerning financial performance. We disclose these non-GAAP measures, and the related reconciliations, because we believe investors use these metrics in evaluating longer-term period-over-period performance. These metrics also allow investors to better understand and evaluate the information used by management to assess operating performance.

Certain amounts in the financial statements may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented.

24

The following tables summarize our operating results on a reported basis and on a same store basis for the year ended December 31, 2021, as compared to 2020.

Reported Operating Data — Consolidated

(In millions, except unit data)

[[GREPCENT_TABLE]]
[["","For the Years Ended December 31,"],["","2021","","2020","","Increase/ (Decrease)","","% Change","","","Currency Impact on Current Period Results","","Constant Currency % Change"],["Revenues:"],["New vehicle retail sales","$","6,504.8","","","$","5,428.4","","","$","1,076.3","","","19.8","%","","","$","77.3","","","18.4","%"],["Used vehicle retail sales","4,438.8","","","3,055.6","","","1,383.2","","","45.3","%","","","68.2","","","43.0","%"],["Used vehicle wholesale sales","365.7","","","295.8","","","69.9","","","23.6","%","","","8.1","","","20.9","%"],["Total used","4,804.6","","","3,351.4","","","1,453.1","","","43.4","%","","","76.3","","","41.1","%"],["Parts and service sales","1,591.2","","","1,357.4","","","233.7","","","17.2","%","","","14.0","","","16.2","%"],["F&I, net","581.4","","","463.0","","","118.5","","","25.6","%","","","3.6","","","24.8","%"],["Total revenues","$","13,481.9","","","$","10,600.2","","","$","2,881.7","","","27.2","%","","","$","172.1","","","25.6","%"],["Gross profit:"],["New vehicle retail sales","$","610.8","","","$","319.4","","","$","291.4","","","91.3","%","","","$","4.9","","","89.7","%"],["Used vehicle retail sales","354.2","","","205.0","","","149.3","","","72.8","%","","","4.5","","","70.6","%"],["Used vehicle wholesale sales","24.9","","","10.2","","","14.7","","","144.2","%","","","0.6","","","138.7","%"],["Total used","379.1","","","215.1","","","164.0","","","76.2","%","","","5.1","","","73.9","%"],["Parts and service sales","869.4","","","736.7","","","132.7","","","18.0","%","","","8.4","","","16.9","%"],["F&I, net","581.4","","","463.0","","","118.5","","","25.6","%","","","3.6","","","24.8","%"],["Total gross profit","$","2,440.7","","","$","1,734.1","","","$","706.6","","","40.7","%","","","$","21.9","","","39.5","%"],["Gross margin:"],["New vehicle retail sales","9.4","%","","5.9","%","","3.5","%"],["Used vehicle retail sales","8.0","%","","6.7","%","","1.3","%"],["Used vehicle wholesale sales","6.8","%","","3.4","%","","3.4","%"],["Total used","7.9","%","","6.4","%","","1.5","%"],["Parts and service sales","54.6","%","","54.3","%","","0.4","%"],["Total gross margin","18.1","%","","16.4","%","","1.7","%"],["Units sold:"],["Retail new vehicles sold","146,072","","","134,706","","","11,366","","","8.4","%"],["Retail used vehicles sold","161,857","","","137,502","","","24,355","","","17.7","%"],["Wholesale used vehicles sold","39,486","","","40,330","","","(844)","","","(2.1)","%"],["Total used","201,343","","","177,832","","","23,511","","","13.2","%"],["Average sales price per unit sold:"],["New vehicle retail","$","44,531","","","$","40,298","","","$","4,233","","","10.5","%","","","$","529","","","9.2","%"],["Used vehicle retail","$","27,424","","","$","22,223","","","$","5,202","","","23.4","%","","","$","421","","","21.5","%"],["Gross profit per unit sold:"],["New vehicle retail sales","$","4,181","","","$","2,371","","","$","1,811","","","76.4","%","","","$","34","","","75.0","%"],["Used vehicle retail sales","$","2,189","","","$","1,491","","","$","698","","","46.8","%","","","$","28","","","45.0","%"],["Used vehicle wholesale sales","$","630","","","$","253","","","$","377","","","149.4","%","","","$","14","","","143.8","%"],["Total used","$","1883","","","$","1210","","","$","673","","","55.6","%","","","$","25","","","53.6","%"],["F&I PRU","$","1,888","","","$","1,701","","","$","187","","","11.0","%","","","$","12","","","10.3","%"],["Other:"],["SG&A expenses","$","1,477.2","","","$","1,138.2","","","$","338.9","","","29.8","%","","","$","15.2","","","28.4","%"],["SG&A as % gross profit","60.5","%","","65.6","%","","(5.1)","%"],["Floorplan expense:"],["Floorplan interest expense","$","27.6","","","$","39.2","","","$","(11.6)","","","(29.5)","%","","","$","0.4","","","(30.5)","%"],["Less: floorplan assistance (1)","54.2","","","47.3","","","6.9","","","14.5","%","","","\u2014","","","14.5","%"],["Net floorplan expense","$","(26.5)","","","$","(8.1)","","","$","(18.5)","","","","","","$","0.4"]]
[[/GREPCENT_TABLE]]

(1) Floorplan assistance is included within New vehicle retail Gross profit above and New vehicle retail Cost of sales in our Consolidated Statements of Operations.

25

Same Store Operating Data — Consolidated

(In millions, except unit data)

[[GREPCENT_TABLE]]
[["","","For the Years Ended December 31,"],["","","2021","","2020","","Increase/ (Decrease)","","% Change","","","Currency Impact on Current Period Results","","Constant Currency % Change"],["Revenues:"],["New vehicle retail sales","$","6,249.4","","","$","5,367.7","","","$","881.7","","","16.4","%","","","$","74.1","","","15.0","%"],["Used vehicle retail sales","4,287.7","","","3,018.1","","","1,269.6","","","42.1","%","","","64.3","","","39.9","%"],["Used vehicle wholesale sales","355.6","","","292.0","","","63.6","","","21.8","%","","","7.8","","","19.1","%"],["Total used","4,643.3","","","3,310.1","","","1,333.2","","","40.3","%","","","72.1","","","38.1","%"],["Parts and service sales","1,531.5","","","1,334.7","","","196.8","","","14.7","%","","","12.9","","","13.8","%"],["F&I, net","565.1","","","457.9","","","107.2","","","23.4","%","","","3.5","","","22.7","%"],["Total revenues","$","12,989.3","","","$","10,470.4","","","$","2,518.9","","","24.1","%","","","$","163.4","","","22.5","%"],["Gross profit:"],["New vehicle retail sales","$","583.8","","","$","315.4","","","$","268.4","","","85.1","%","","","$","4.7","","","83.6","%"],["Used vehicle retail sales","340.9","","","203.3","","","137.6","","","67.7","%","","","4.3","","","65.6","%"],["Used vehicle wholesale sales","23.9","","","10.1","","","13.9","","","138.0","%","","","0.6","","","132.4","%"],["Total used","364.8","","","213.4","","","151.5","","","71.0","%","","","4.8","","","68.7","%"],["Parts and service sales","836.3","","","724.1","","","112.2","","","15.5","%","","","7.8","","","14.4","%"],["F&I, net","565.1","","","457.9","","","107.2","","","23.4","%","","","3.5","","","22.7","%"],["Total gross profit","$","2,350.1","","","$","1,710.8","","","$","639.2","","","37.4","%","","","$","20.7","","","36.2","%"],["Gross margin:"],["New vehicle retail sales","9.3","%","","5.9","%","","3.5","%"],["Used vehicle retail sales","8.0","%","","6.7","%","","1.2","%"],["Used vehicle wholesale sales","6.7","%","","3.4","%","","3.3","%"],["Total used","7.9","%","","6.4","%","","1.4","%"],["Parts and service sales","54.6","%","","54.3","%","","0.4","%"],["Total gross margin","18.1","%","","16.3","%","","1.8","%"],["Units sold:"],["Retail new vehicles sold","140,113","","","133,155","","","6,958","","","5.2","%"],["Retail used vehicles sold","156,251","","","135,521","","","20,730","","","15.3","%"],["Wholesale used vehicles sold","37,943","","","39,763","","","(1,820)","","","(4.6)","%"],["Total used","194,194","","","175,284","","","18,910","","","10.8","%"],["Average sales price per unit sold:"],["New vehicle retail","$","44,602","","","$","40,312","","","$","4,291","","","10.6","%","","","$","529","","","9.3","%"],["Used vehicle retail","$","27,441","","","$","22,271","","","$","5,171","","","23.2","%","","","$","412","","","21.4","%"],["Gross profit per unit sold:"],["New vehicle retail sales","$","4,167","","","$","2,369","","","$","1,798","","","75.9","%","","","$","33","","","74.5","%"],["Used vehicle retail sales","$","2,182","","","$","1,500","","","$","682","","","45.4","%","","","$","27","","","43.6","%"],["Used vehicle wholesale sales","$","630","","","$","253","","","$","378","","","149.4","%","","","$","15","","","143.6","%"],["Total used","$","1,879","","","$","1,217","","","$","662","","","54.4","%","","","$","25","","","52.3","%"],["F&I PRU","$","1,907","","","$","1,704","","","$","203","","","11.9","%","","","$","12","","","11.2","%"],["Other:"],["SG&A expenses","$","1,415.9","","","$","1,123.3","","","$","292.6","","","26.0","%","","","$","14.0","","","24.8","%"],["SG&A as % gross profit","60.2","%","","65.7","%","","(5.4)","%"]]
[[/GREPCENT_TABLE]]

26

Reported Operating Data — U.S.

(In millions, except unit data)

[[GREPCENT_TABLE]]
[["","","For the Years Ended December 31,"],["","","2021","","2020","","Increase/(Decrease)","","% Change"],["Revenues:"],["New vehicle retail sales","","$","5,371.4","","","$","4,406.6","","","$","964.9","","","21.9","%"],["Used vehicle retail sales","","3,356.3","","","2,348.5","","","1,007.8","","","42.9","%"],["Used vehicle wholesale sales","","232.2","","","169.4","","","62.7","","","37.0","%"],["Total used","","3,588.5","","","2,517.9","","","1,070.5","","","42.5","%"],["Parts and service sales","","1,361.4","","","1,162.6","","","198.8","","","17.1","%"],["F&I, net","","525.0","","","416.3","","","108.6","","","26.1","%"],["Total revenues","","$","10,846.3","","","$","8,503.4","","","$","2,342.9","","","27.6","%"],["Gross profit:"],["New vehicle retail sales","","$","533.4","","","$","272.4","","","$","261.0","","","95.8","%"],["Used vehicle retail sales","","281.8","","","162.8","","","118.9","","","73.0","%"],["Used vehicle wholesale sales","","17.3","","","7.7","","","9.6","","","123.9","%"],["Total used","","299.0","","","170.5","","","128.5","","","75.3","%"],["Parts and service sales","","732.1","","","626.8","","","105.4","","","16.8","%"],["F&I, net","","525.0","","","416.3","","","108.6","","","26.1","%"],["Total gross profit","","$","2,089.5","","","$","1,486.0","","","$","603.5","","","40.6","%"],["Gross margin:"],["New vehicle retail sales","","9.9","%","","6.2","%","","3.7","%"],["Used vehicle retail sales","","8.4","%","","6.9","%","","1.5","%"],["Used vehicle wholesale sales","","7.4","%","","4.6","%","","2.9","%"],["Total used","","8.3","%","","6.8","%","","1.6","%"],["Parts and service sales","","53.8","%","","53.9","%","","(0.1)","%"],["Total gross margin","","19.3","%","","17.5","%","","1.8","%"],["Units sold:"],["Retail new vehicles sold","","118,211","","","105,022","","","13,189","","","12.6","%"],["Retail used vehicles sold","","125,409","","","108,411","","","16,998","","","15.7","%"],["Wholesale used vehicles sold","","24,790","","","24,679","","","111","","","0.4","%"],["Total used","","150,199","","","133,090","","","17,109","","","12.9","%"],["Average sales price per unit sold:"],["New vehicle retail","","$","45,439","","","$","41,959","","","$","3,481","","","8.3","%"],["Used vehicle retail","","$","26,763","","","$","21,663","","","$","5,100","","","23.5","%"],["Gross profit per unit sold:"],["New vehicle retail sales","","$","4,512","","","$","2,593","","","$","1,918","","","74.0","%"],["Used vehicle retail sales","","$","2,247","","","$","1,502","","","$","745","","","49.6","%"],["Used vehicle wholesale sales","","$","697","","","$","313","","","$","384","","","122.9","%"],["Total used","","$","1,991","","","$","1,281","","","$","710","","","55.4","%"],["F&I PRU","","$","2,155","","","$","1,951","","","$","204","","","10.5","%"],["Other:"],["SG&A expenses","","$","1,234.9","","","$","947.0","","","$","287.9","","","30.4","%"],["SG&A as % gross profit","","59.1","%","","63.7","%","","(4.6)","%"]]
[[/GREPCENT_TABLE]]

27

Same Store Operating Data — U.S.

(In millions, except unit data)

[[GREPCENT_TABLE]]
[["","For the Years Ended December 31,"],["","2021","","2020","","Increase/(Decrease)","","% Change"],["Revenues:"],["New vehicle retail sales","$","5,169.5","","","$","4,351.4","","","$","818.2","","","18.8","%"],["Used vehicle retail sales","3,274.3","","","2,316.7","","","957.6","","","41.3","%"],["Used vehicle wholesale sales","227.7","","","166.1","","","61.6","","","37.1","%"],["Total used","3,502.0","","","2,482.8","","","1,019.3","","","41.1","%"],["Parts and service sales","1,321.2","","","1,150.3","","","170.9","","","14.9","%"],["F&I, net","510.9","","","411.8","","","99.1","","","24.1","%"],["Total revenues","$","10,503.6","","","$","8,396.2","","","$","2,107.5","","","25.1","%"],["Gross profit:"],["New vehicle retail sales","$","510.7","","","$","268.7","","","$","242.0","","","90.1","%"],["Used vehicle retail sales","273.0","","","161.6","","","111.4","","","69.0","%"],["Used vehicle wholesale sales","16.5","","","7.6","","","8.9","","","116.6","%"],["Total used","289.4","","","169.2","","","120.3","","","71.1","%"],["Parts and service sales","710.0","","","619.1","","","90.9","","","14.7","%"],["F&I, net","510.9","","","411.8","","","99.1","","","24.1","%"],["Total gross profit","$","2,021.0","","","$","1,468.8","","","$","552.3","","","37.6","%"],["Gross margin:"],["New vehicle retail sales","9.9","%","","6.2","%","","3.7","%"],["Used vehicle retail sales","8.3","%","","7.0","%","","1.4","%"],["Used vehicle wholesale sales","7.2","%","","4.6","%","","2.7","%"],["Total used","8.3","%","","6.8","%","","1.5","%"],["Parts and service sales","53.7","%","","53.8","%","","(0.1)","%"],["Total gross margin","19.2","%","","17.5","%","","1.7","%"],["Units sold:"],["Retail new vehicles sold","113,854","","","103,722","","","10,132","","","9.8","%"],["Retail used vehicles sold","122,653","","","106,809","","","15,844","","","14.8","%"],["Wholesale used vehicles sold","24,125","","","24,251","","","(126)","","","(0.5)","%"],["Total used","146,778","","","131,060","","","15,718","","","12.0","%"],["Average sales price per unit sold:"],["New vehicle retail","$","45,405","","","$","41,952","","","$","3,453","","","8.2","%"],["Used vehicle retail","$","26,696","","","$","21,690","","","$","5,006","","","23.1","%"],["Gross profit per unit sold:"],["New vehicle retail sales","$","4,486","","","$","2,591","","","$","1,895","","","73.1","%"],["Used vehicle retail sales","$","2,225","","","$","1,513","","","$","713","","","47.1","%"],["Used vehicle wholesale sales","$","683","","","$","314","","","$","369","","","117.8","%"],["Total used","$","1,972","","","$","1,291","","","$","681","","","52.8","%"],["F&I PRU","$","2,160","","","$","1,956","","","$","204","","","10.4","%"],["Other:"],["SG&A expenses","$","1,193.6","","","$","936.0","","","$","257.7","","","27.5","%"],["SG&A as % gross profit","59.1","%","","63.7","%","","(4.7)","%"]]
[[/GREPCENT_TABLE]]

28

U.S. Region — Year Ended December 31, 2021 compared to 2020

The following discussion of our U.S. operating results is on an as reported and same store basis. The difference between as reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings. During 2021, our U.S. dealership operations continued to be impacted by reduced demand caused by the COVID-19 pandemic and the restrictions put in place by local governments to contain the virus.

Revenues

Total revenues in the U.S. during the year ended December 31, 2021, increased $2,342.9 million, or 27.6%, as compared to the same period in 2020. Total same store revenues in the U.S. during the year ended December 31, 2021, increased $2,107.5 million, or 25.1%, as compared to the same period in 2020. We experienced increases across all revenues streams, year-over-year. New and used vehicle retail same store revenues benefited from a 77.2% increase in sales from our online digital platform, AcceleRide®, during the year ended December 31, 2021, as compared to the same period in 2020.

New vehicle retail same store sales revenues outperformed the prior year as a result of increased demand driving higher prices, coupled with a moderate increase in new vehicle retail units sold. Supply chain issues, including an ongoing semiconductor shortage and other logistics challenges, persisted throughout 2021 for OEMs, leading to sustained lower vehicle production and deliveries of fewer vehicles to dealerships than customer purchases. On December 31, 2021, our U.S. new vehicle inventory supply was 9 days which was 39 days lower than December 31, 2020, days’ supply of 48.

Used vehicle retail same store units and sales revenues, outperformed the prior year as a result of increased demand, driving higher prices. Used vehicle inventory levels remained healthy in 2021 through sourcing more direct purchases from vehicle owners. While used vehicle wholesale same store units were down modestly, used vehicle wholesale same store sales revenues outperformed the prior year as a result of increased used vehicle pricing driven by higher demand.

Parts and service same store revenues outperformed the prior year as a result of an increase in our customer pay revenues, wholesale revenues and collision revenues; partially offset by a decline in our warranty revenues. We expect warranty revenues to increase as and when new vehicle production and deliveries from OEMs increase.

F&I same store revenues outperformed the prior year as a result of increased same store total retail unit sales, coupled with higher income per contract on finance and other insurance product offerings and higher penetration rates. These increases were partially offset by an increase in our overall chargeback experience.

Gross Profit

Total gross profit in the U.S. during the year ended December 31, 2021, increased $603.5 million, or 40.6%, as compared to the same period in 2020. Total same store gross profit in the U.S. during the year ended December 31, 2021, increased $552.3 million, or 37.6%, as compared to the same period in 2020, driven by increases across all lines of service.

New vehicle retail same store gross profit increased 90.1% driven by a 73.1% increase in new vehicle retail same store gross profit per unit sold, coupled with a 9.8% increase in new vehicle retail same store unit sales. The increase in new vehicle retail same store gross profit per unit sold reflects higher demand and inventory supply constraints as a result of the global semiconductor chip shortage.

Used vehicle retail same store gross profit increased 69.0%, driven by a 47.1% increase in used vehicle retail same store gross profit per unit sold, coupled with a 14.8% increase in used vehicle retail same store unit sales. The increase in used vehicle retail same store gross profit per unit sold reflects a combination of higher market prices and strong demand. Used vehicle wholesale same store gross profit increased as industry supply shortages drove up auction prices as reflected in the Manheim Index.

Parts and service same store gross profit increased 14.7%, primarily driven by the increase in our customer-pay business reflecting increased business activity.

F&I same store gross profit increased 24.1%, driven by increases in revenue discussed above. Total same store gross margin increased 170 basis points, driven by higher new and used vehicle margins, reflecting vehicle supply constraints.

SG&A Expenses

Total SG&A expenses in the U.S. during the year ended December 31, 2021, increased $287.9 million, or 30.4%, as compared to the same period in 2020. Total same store SG&A expenses in the U.S. during the year ended December 31, 2021, increased $257.7 million, or 27.5%, as compared to the same period in 2020, primarily driven by increased variable commission payments as a result of improvements in sales volume and margins and an increase in other variable expenses associated with the rise in business activity. Total same store SG&A as a percent of gross profit improved from 63.7% for the year ended December 31, 2020, to 59.1% for the same period of 2021, driven by productivity gains and higher vehicle margins.

29

Total same store SG&A expenses in the U.S. for the year ended December 31, 2021, included $2.8 million in disaster pay and insurance deductible expense associated with the February winter storm in Texas and Hurricane Ida, coupled with $12.9 million in acquisition costs, partially offset by $5.3 million in gains related to favorable legal settlements and $2.1 million in gains from dealership and real estate transactions. Total same store SG&A expense in the U.S. for the year ended December 31, 2020, included $10.6 million in expense for an out-of-period adjustment related to stock-based compensation and a $2.7 million gain related to a favorable legal settlement.

30

Reported Operating Data — U.K.

(In millions, except unit data)

[[GREPCENT_TABLE]]
[["","For the Years Ended December 31,"],["","2021","","2020","","Increase/ (Decrease)","","% Change","","","Currency Impact on Current Period Results","","Constant Currency % Change"],["Revenues:"],["New vehicle retail sales","$","1,133.3","","","$","1,021.8","","","$","111.5","","","10.9","%","","","$","77.3","","","3.3","%"],["Used vehicle retail sales","1,082.5","","","707.2","","","375.4","","","53.1","%","","","68.2","","","43.4","%"],["Used vehicle wholesale sales","133.6","","","126.4","","","7.2","","","5.7","%","","","8.1","","","(0.7)","%"],["Total used","1,216.1","","","833.5","","","382.6","","","45.9","%","","","76.3","","","36.7","%"],["Parts and service sales","229.8","","","194.8","","","34.9","","","17.9","%","","","14.0","","","10.7","%"],["F&I, net","56.4","","","46.6","","","9.8","","","21.0","%","","","3.6","","","13.3","%"],["Total revenues","$","2,635.6","","","$","2,096.8","","","$","538.8","","","25.7","%","","","$","172.1","","","17.5","%"],["Gross profit:"],["New vehicle retail sales","$","77.4","","","$","47.0","","","$","30.4","","","64.8","%","","","$","4.9","","","54.3","%"],["Used vehicle retail sales","72.5","","","42.1","","","30.4","","","72.1","%","","","4.5","","","61.4","%"],["Used vehicle wholesale sales","7.6","","","2.5","","","5.1","","","NM","","","0.6","","","NM"],["Total used","80.1","","","44.6","","","35.5","","","79.6","%","","","5.1","","","68.2","%"],["Parts and service sales","137.3","","","109.9","","","27.4","","","24.9","%","","","8.4","","","17.3","%"],["F&I, net","56.4","","","46.6","","","9.8","","","21.0","%","","","3.6","","","13.3","%"],["Total gross profit","$","351.2","","","$","248.1","","","$","103.1","","","41.5","%","","","$","21.9","","","32.7","%"],["Gross margin:"],["New vehicle retail sales","6.8","%","","4.6","%","","2.2","%"],["Used vehicle retail sales","6.7","%","","6.0","%","","0.7","%"],["Used vehicle wholesale sales","5.7","%","","1.9","%","","3.7","%"],["Total used","6.6","%","","5.3","%","","1.2","%"],["Parts and service sales","59.7","%","","56.4","%","","3.3","%"],["Total gross margin","13.3","%","","11.8","%","","1.5","%"],["Units sold:"],["Retail new vehicles sold","27,861","","","29,684","","","(1,823)","","","(6.1)","%"],["Retail used vehicles sold","36,448","","","29,091","","","7,357","","","25.3","%"],["Wholesale used vehicles sold","14,696","","","15,651","","","(955)","","","(6.1)","%"],["Total used","51,144","","","44,742","","","6,402","","","14.3","%"],["Average sales price per unit sold:"],["New vehicle retail","$","40,678","","","$","34,424","","","$","6,254","","","18.2","%","","","$","2,776","","","10.1","%"],["Used vehicle retail","$","29,701","","","$","24,309","","","$","5,392","","","22.2","%","","","$","1,871","","","14.5","%"],["Gross profit per unit sold:"],["New vehicle retail sales","$","2,779","","","$","1,583","","","$","1,196","","","75.6","%","","","$","177","","","64.4","%"],["Used vehicle retail sales","$","1,988","","","$","1,448","","","$","540","","","37.3","%","","","$","124","","","28.8","%"],["Used vehicle wholesale sales","$","516","","","$","157","","","$","359","","","NM","","","$","38","","","NM"],["Total used","$","1,565","","","$","997","","","$","569","","","57.1","%","","","$","99","","","47.1","%"],["F&I PRU","$","878","","","$","793","","","$","84","","","10.6","%","","","$","56","","","3.5","%"],["Other:"],["SG&A expenses","$","242.2","","","$","191.2","","","$","51.0","","","26.7","%","","","$","15.2","","","18.7","%"],["SG&A as % gross profit","69.0","%","","77.1","%","","(8.1)","%"]]
[[/GREPCENT_TABLE]]

NM — Not Meaningful

31

Same Store Operating Data — U.K.

(In millions, except unit data)

[[GREPCENT_TABLE]]
[["","For the Years Ended December 31,"],["","2021","","2020","","Increase/ (Decrease)","","% Change","","","Currency Impact on Current Period Results","","Constant Currency % Change"],["Revenues:"],["New vehicle retail sales","$","1,079.8","","","$","1,016.3","","","$","63.5","","","6.2","%","","","$","74.1","","","(1.0)","%"],["Used vehicle retail sales","1,013.4","","","701.5","","","312.0","","","44.5","%","","","64.3","","","35.3","%"],["Used vehicle wholesale sales","127.9","","","125.9","","","1.9","","","1.5","%","","","7.8","","","(4.7)","%"],["Total used","1,141.3","","","827.4","","","313.9","","","37.9","%","","","72.1","","","29.2","%"],["Parts and service sales","210.3","","","184.4","","","25.9","","","14.0","%","","","12.9","","","7.0","%"],["F&I, net","54.3","","","46.1","","","8.1","","","17.6","%","","","3.5","","","10.0","%"],["Total revenues","$","2,485.7","","","$","2,074.3","","","$","411.4","","","19.8","%","","","$","163.4","","","12.0","%"],["Gross profit:"],["New vehicle retail sales","$","73.1","","","$","46.7","","","$","26.4","","","56.4","%","","","$","4.7","","","46.4","%"],["Used vehicle retail sales","68.0","","","41.7","","","26.2","","","62.8","%","","","4.3","","","52.6","%"],["Used vehicle wholesale sales","7.4","","","2.4","","","5.0","","","NM","","","0.6","","","NM"],["Total used","75.4","","","44.2","","","31.2","","","70.6","%","","","4.8","","","59.7","%"],["Parts and service sales","126.3","","","105.0","","","21.3","","","20.2","%","","","7.8","","","12.8","%"],["F&I, net","54.3","","","46.1","","","8.1","","","17.6","%","","","3.5","","","10.0","%"],["Total gross profit","$","329.0","","","$","242.1","","","$","86.9","","","35.9","%","","","$","20.7","","","27.4","%"],["Gross margin:"],["New vehicle retail sales","6.8","%","","4.6","%","","2.2","%"],["Used vehicle retail sales","6.7","%","","6.0","%","","0.8","%"],["Used vehicle wholesale sales","5.8","%","","1.9","%","","3.9","%"],["Total used","6.6","%","","5.3","%","","1.3","%"],["Parts and service sales","60.0","%","","56.9","%","","3.1","%"],["Total gross margin","13.2","%","","11.7","%","","1.6","%"],["Units sold:"],["Retail new vehicles sold","26,259","","","29,433","","","(3,174)","","","(10.8)","%"],["Retail used vehicles sold","33,598","","","28,712","","","4,886","","","17.0","%"],["Wholesale used vehicles sold","13,818","","","15,512","","","(1,694)","","","(10.9)","%"],["Total used","47,416","","","44,224","","","3,192","","","7.2","%"],["Average sales price per unit sold:"],["New vehicle retail","$","41,123","","","$","34,530","","","$","6,592","","","19.1","%","","","$","2,823","","","10.9","%"],["Used vehicle retail","$","30,163","","","$","24,431","","","$","5,732","","","23.5","%","","","$","1,914","","","15.6","%"],["Gross profit per unit sold:"],["New vehicle retail sales","$","2,783","","","$","1,588","","","$","1,196","","","75.3","%","","","$","178","","","64.1","%"],["Used vehicle retail sales","$","2,023","","","$","1,454","","","$","569","","","39.1","%","","","$","127","","","30.4","%"],["Used vehicle wholesale sales","$","539","","","$","158","","","$","381","","","NM","","","$","40","","","NM"],["Total used","$","1,590","","","$","999","","","$","591","","","59.2","%","","","$","102","","","49.0","%"],["F&I PRU","$","907","","","$","794","","","$","113","","","14.2","%","","","$","58","","","6.9","%"],["Other:"],["SG&A expenses","$","222.2","","","$","187.3","","","$","34.9","","","18.6","%","","","$","14.0","","","11.2","%"],["SG&A as % gross profit","67.5","%","","77.4","%","","(9.8)","%"]]
[[/GREPCENT_TABLE]]

NM — Not Meaningful

32

U.K. Region — Year Ended December 31, 2021 compared to 2020

The following discussion of our U.K. operating results is on an as reported and same store basis. The difference between as reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings. At the end of 2020, the U.K. experienced a surge in COVID-19 cases, which led to a government-mandated closure of all non-essential businesses beginning January 4, 2021. In mid-April 2021, the COVID-19 restrictions affecting our U.K. dealership showrooms were lifted and our dealerships were able to reopen. In the prior year, beginning March 21, 2020, the government mandated closure of all U.K. businesses, which remained in effect through May 18, 2020, for service and June 1, 2020, for our showrooms.

Revenues

Total revenues in the U.K. during the year ended December 31, 2021, increased $538.8 million, or 25.7%, as compared to the same period in 2020. Total same store revenues in the U.K. during the year ended December 31, 2021, increased $411.4 million, or 19.8%, as compared to the same period in 2020. On a constant currency basis, total same store revenues increased 12.0%, driven by increases in used vehicle retail, F&I and parts and service, partially offset by a decline in new vehicle retail and used vehicle wholesale same store revenues.

New vehicle retail same store revenues, on a constant currency basis, underperformed compared to the prior year due to a decrease in new vehicle retail same store unit sales, which was partially offset by an increase in new vehicle retail same store average sales price per unit sold. The decrease in new vehicle retail same store units sales primarily reflects supply constraints as OEMs struggled to produce new vehicles due to parts shortages, including the global semiconductor chip shortage. At December 31, 2021, our U.K. new vehicle inventory supply was 33 days, which was 69 days lower than December 31, 2020 days’ supply of 102. The increase in the average new vehicle retail same store sales price was driven by both supply shortages and high vehicle demand, which was pent-up over the past years due to Brexit and the COVID-19 pandemic.

Used vehicle retail same store revenues, on a constant currency basis, outperformed compared to the prior year due to increased used vehicle retail same store unit sales, coupled with higher used vehicle retail same store average sales prices, benefited by strong consumer demand and the new vehicle inventory shortages.

Parts and service same store revenues, on a constant currency basis, outperformed the prior year, driven by increases in our customer-pay and wholesale businesses reflecting increased business activity with the reduction of COVID-19 restrictions in 2021.

F&I same store revenues, on a constant currency basis, outperformed the prior year, driven by higher income per contract and improved penetration rates on all of our product offerings, coupled with an increase in used vehicle retail same store unit sales.

Gross Profit

Total gross profit in the U.K. during the year ended December 31, 2021, increased $103.1 million, or 41.5%, as compared to the same period in 2020. Total same store gross profit in the U.K. during the year ended December 31, 2021, increased $86.9 million, or 35.9%, as compared to the same period in 2020. On a constant currency basis, total same store gross profit increased 27.4% driven by improvements across all service lines.

New vehicle retail same store gross profit on a constant currency basis increased 46.4%, driven by a 64.1% increase in new vehicle retail same store average gross profit per unit sold, partially offset by a 10.8% decline in new vehicle retail same store unit sales. The increase in new vehicle retail same store gross profit per unit sold reflects both increased demand and supply constraints related to the COVID-19 pandemic and the global semiconductor chip shortage.

Used vehicle retail same store gross profit, on a constant currency basis, improved 52.6% on a 30.4% increase in used vehicle retail same store average gross profit per unit sold, coupled with a 17.0% increase in used vehicle retail same store unit sales. The increase in used vehicle retail same store average gross profit per unit sold reflects higher demand and new vehicle supply shortages.

Parts and service same store gross profit, on a constant currency basis, increased 12.8%, driven by the increases in our businesses discussed above.

F&I same store gross profit, on a constant currency basis, improved 10.0% as previously discussed. Total same store gross margin in the U.K. grew 160 basis points, driven by higher new and used vehicle margins due to increased demand and supply constraints and increased parts and service margins, reflecting improved customer-pay margins and higher internal work as a result of increased used vehicle sales volumes.

33

SG&A Expenses

Total SG&A expenses in the U.K. during the year ended December 31, 2021, increased $51.0 million, or 26.7%, as compared to the same period in 2020. Total same store SG&A expenses in the U.K. during the year ended December 31, 2021, increased $34.9 million, or 18.6%, as compared to the same period in 2020. On a constant currency basis, total same store SG&A expenses increased 11.2%, driven by increased business activity as COVID-19 restrictions were lifted early in the second quarter of 2021. As a percentage of gross profit, total same store SG&A expenses improved from 77.4% for the year ended 2020 to 67.5% for the same period of 2021, driven by productivity gains and higher vehicle margins. Total same store SG&A expenses in 2021 included $0.6 million in acquisition costs. Total same store SG&A expenses in 2020 included $1.2 million in severance costs for redundancy due to the COVID-19 pandemic.

Consolidated Selected Comparisons — Year Ended December 31, 2021 compared to 2020

The following table (in millions) and discussion of our results of operations is on a consolidated basis, unless otherwise noted.

[[GREPCENT_TABLE]]
[["","For the Years Ended December 31,"],["","2021","","2020","","Increase/ (Decrease)","","% Change"],["Depreciation and amortization expense","$","77.4","","","$","73.5","","","$","3.9","","","5.3","%"],["Asset impairments","$","1.7","","","$","26.7","","","$","(25.0)","","","(93.6)","%"],["Floorplan interest expense","$","27.6","","","$","39.2","","","$","(11.6)","","","(29.5)","%"],["Other interest expense, net","$","55.8","","","$","61.9","","","$","(6.1)","","","(9.8)","%"],["Loss on extinguishment of debt","$","\u2014","","","$","13.7","","","$","(13.7)","","","(100.0)","%"],["Provision for income taxes","$","175.5","","","$","84.2","","","$","91.3","","","108.5","%"]]
[[/GREPCENT_TABLE]]

Depreciation and Amortization Expense

Total depreciation and amortization expense for the year ended December 31, 2021, was higher compared to the same period in 2020, primarily attributable to acquired property and equipment in our U.S. region, as we continue to strategically add dealership-related real estate to our investment portfolio and make improvements to our existing facilities intended to enhance the profitability of our dealerships and the overall customer experience.

Impairment of Assets

No goodwill impairments were recorded during the years ended December 31, 2021, and 2020. No impairments of intangible franchise rights were recorded during year ended December 31, 2021. During the year ended December 31, 2020, we recorded franchise rights impairment charges of $11.1 million in the U.K. region and $9.7 million in the U.S. region.

We review long-lived assets including property and equipment and ROU assets for impairment at the lowest level of identifiable cash flows whenever there is evidence that the carrying value of these assets may not be recoverable (i.e., triggering events). During the year ended December 31, 2021, we recorded property and equipment impairment charges of $1.7 million in the U.S. region. During the year ended December 31, 2020, we recorded property and equipment impairment charges of $4.2 million in the U.S. region and ROU asset impairment charges of $1.8 million in the U.K. region.

See Note 12. Intangible Franchise Rights and Goodwill, Note 10. Property and Equipment, Net and Note 11. Leases within our Notes to Consolidated Financial Statements for further discussion of our impairments.

Floorplan Interest Expense

Total floorplan interest expense during the year ended December 31, 2021, decreased $11.6 million, or 29.5%, as compared to the same period in 2020. Our floorplan interest expense fluctuates with changes in our borrowings outstanding and interest rates, which are based on LIBOR, SOFR, U.S. Prime rate or a benchmark rate. To mitigate the impact of interest rate fluctuations, we employ an interest rate hedging strategy, whereby we swap variable interest rate exposure on a portion of our borrowings for a fixed interest rate. The year over year decrease was primarily due to lower floorplan borrowings as a result of lower inventory levels and lower weighted average interest rates mainly due to a decline in LIBOR, partially offset by higher realized expense on our interest rate swaps, as well as a loss on interest rate swaps of $3.4 million resulting from the impact of the de-designation and termination of certain interest rate swaps due to the decline in inventory levels. Refer to Note 7. Financial Instruments and Fair Value Measurements within our Notes to Consolidated Financial Statements for additional discussion of interest rate swaps.

34

Other Interest Expense, Net

Total other interest expense, net during the year ended December 31, 2021, decreased $6.1 million, or 9.8%, as compared to the same period in 2020. Other interest expense, net consists of interest charges primarily on our 4.00% Senior Notes, real estate related debt and other debt, partially offset by interest income. The year over year decrease was primarily attributable to lower interest rates achieved through debt refinancing activities in the prior year.

Loss on Extinguishment of Debt

We experienced no loss on the extinguishment of debt during the year ended December 31, 2021. During the year ended December 31, 2020, we recognized a $13.7 million loss on the extinguishment of our 5.00% Senior Notes due June 2022 (the “5.00% Senior Notes”) and 5.25% Senior Notes due June 2023 (the “5.25% Senior Notes”).

Provision for Income Taxes

Provision for income taxes from continuing operations during the year ended December 31, 2021, increased $91.3 million, or 108.5%, as compared to the same period in 2020. For the year ended December 31, 2021 and 2020 , we recorded a tax provision from continuing operations of $175.5 million and $84.2 million, respectively. The year-over-year increase was primarily due to higher pre-tax book income. The 2021 effective tax rate of 21.9% was lower than the 2020 effective tax rate of 22.1%, primarily as a result of decreased valuation allowances with respect to NOLs in certain U.S. states and higher excess tax deductions for stock compensation.

We believe that it is more-likely-than-not that our deferred tax assets, net of valuation allowances provided, will be realized, based primarily on the assumption of future taxable income. We expect our effective tax rate in 2022 will be between approximately 22.5% and 23.5%.

For further discussion, please see Note 15. Income Taxes within our Notes to Consolidated Financial Statements.

Liquidity and Capital Resources

Our liquidity and capital resources are primarily derived from cash on hand, cash temporarily invested as a pay down of our Floorplan Line and FMCC Facility levels (see Note 13. Floorplan Notes Payable in our Notes to Consolidated Financial Statements for additional information), cash from operations, borrowings under our credit facilities, working capital, dealership and real estate acquisition financing and proceeds from debt and equity offerings. We anticipate we will generate sufficient cash flows from operations, coupled with cash on hand and available borrowing capacity under our credit facilities, to fund our working capital requirements, service our debt, and meet any other recurring operating expenditures.

Available Liquidity Resources

We had the following sources of liquidity available (in millions):

[[GREPCENT_TABLE]]
[["","December 31, 2021"],["Cash and cash equivalents","$","14.9"],["Floorplan offset accounts","271.9"],["Available capacity under Acquisition Line","7.9"],["Total liquidity","$","294.8"]]
[[/GREPCENT_TABLE]]

Cash Flows

We arrange our new and used vehicle inventory floorplan financing through lenders affiliated with our vehicle manufacturers and our Revolving Credit Facility (as defined in Note 13. Floorplan Notes Payable in the Notes to Consolidated Financial Statements). In accordance with GAAP, we report floorplan financed with lenders affiliated with our vehicle manufacturers (excluding the cash flows from or to manufacturer-affiliated lenders participating in our syndicated lending group) within Cash Flows from Operating Activities in the Consolidated Statements of Cash Flows. We report floorplan financed with the Revolving Credit Facility (including the cash flows from or to manufacturer-affiliated lenders participating in the facility) and other credit facilities in the U.K. unaffiliated with our manufacturer partners, within Cash Flows from Financing Activities in the Consolidated Statements of Cash Flows. Refer to Note 13. Floorplan Notes Payable within our Notes to Consolidated Financial Statements for additional discussion of our Revolving Credit Facility.

35

However, we believe that all floorplan financing of inventory purchases in the normal course of business should correspond with the related inventory activity and be classified as an operating activity. As a result, we use the non-GAAP measure “Adjusted net cash provided by/used in operating activities” and “Adjusted net cash provided by/used in financing activities” to further evaluate our cash flows. We believe that this classification eliminates excess volatility in our operating cash flows prepared in accordance with GAAP. In addition, floorplan financing associated with dealership acquisitions and dispositions are classified as investing activity on an adjusted basis to eliminate excess volatility in our operating cash flows prepared in accordance with GAAP.

The following table reconciles cash flows on a GAAP basis to the corresponding adjusted amounts (in millions):

[[GREPCENT_TABLE]]
[["","","Years Ended December 31,"],["","","2021","","2020"],["CASH FLOWS FROM OPERATING ACTIVITIES:"],["Net cash provided by operating activities:","","$","1,259.6","","","$","805.4"],["Change in Floorplan notes payable \u2014 credit facility and other, excluding floorplan offset and net acquisitions and dispositions","","(491.5)","","","(313.7)"],["Change in Floorplan notes payable \u2014 manufacturer affiliates associated with net acquisitions and dispositions and floorplan offset activity","","(12.7)","","","12.0"],["Adjusted net cash provided by operating activities","","$","755.5","","","$","503.7"],["CASH FLOWS FROM INVESTING ACTIVITIES:"],["Net cash used in investing activities:","","$","(1,251.7)","","","$","(74.7)"],["Change in cash paid for acquisitions, associated with Floorplan notes payable","","137.9","","","\u2014"],["Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable","","(7.0)","","","(8.6)"],["Adjusted net cash used in investing activities","","$","(1,120.8)","","","$","(83.3)"],["CASH FLOWS FROM FINANCING ACTIVITIES:"],["Net cash used in financing activities:","","$","(74.0)","","","$","(668.1)"],["Change in Floorplan notes payable, excluding floorplan offset","","373.2","","","310.3"],["Adjusted net cash provided by (used in) financing activities","","$","299.2","","","$","(357.8)"]]
[[/GREPCENT_TABLE]]

Sources and Uses of Liquidity from Operating Activities — Year Ended December 31, 2021 compared to 2020

For the year ended December 31, 2021, net cash provided by operating activities increased by $454.2 million, as compared to the same period in 2020. On an adjusted basis for the same period, adjusted net cash provided by operating activities increased by $251.8 million. The increase on an adjusted basis was primarily driven by (i) a $265.6 million increase in total net income; (ii) a $113.7 million decrease in inventory levels; (iii) a $94.0 million increase in accounts payable and accrued expenses; (iii) partially offset by a $161.0 million increase in adjusted net floorplan repayments and a $59.0 million increase in prepaid expenses and other assets.

Sources and Uses of Liquidity from Investing Activities — Year Ended December 31, 2021 compared to 2020

For the year ended December 31, 2021, net cash used in investing activities increased by $1.2 billion, as compared to the same period in 2020. On an adjusted basis for the same period, adjusted net cash used in investing activities increased by $1.0 billion, primarily due to an increase in acquisition activities and purchases of property and equipment in 2021. Refer to Note 3. Acquisitions in the Notes to Consolidated Financial Statements for more information of acquisitions.

Capital Expenditures

Our capital expenditures include costs to extend the useful lives of current facilities, as well as to start or expand operations. In general, expenditures relating to the construction or expansion of dealership facilities are driven by dealership acquisition activity, new franchises being granted to us by a manufacturer, significant growth in sales at an existing facility, relocation opportunities or manufacturer imaging programs. We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments. We forecast our capital expenditures for 2022 will be approximately $134.0 million, excluding expenditures related to real estate purchases and future acquisitions, which could generally be funded from excess cash.

36

Sources and Uses of Liquidity from Financing Activities — Year Ended December 31, 2021 compared to 2020

For the year ended December 31, 2021, net cash used in financing activities decreased by $594.2 million, as compared to the same period in 2020. On an adjusted basis for the same period, adjusted net cash provided by financing activities increased by $657.0 million. The increase on an adjusted basis is primarily driven by net borrowings of debt in 2021 of $629.8 million compared to net repayments of debt in 2020 of $195.4 million; partially offset by an increase in share repurchases of $130.4 million in 2021, compared to 2020, and $30.0 million higher net repayment of our Floorplan lines (representing the net cash activity in our floorplan offset account).

Credit Facilities, Debt Instruments and Other Financing Arrangements

Our various credit facilities, debt instruments and other financing arrangements are used to finance the purchase of inventory and real estate, provide acquisition funding and provide working capital for general corporate purposes.

The following table summarizes the commitment of our credit facilities as of December 31, 2021 (in millions):

[[GREPCENT_TABLE]]
[["","","As of December 31, 2021"],["","","Total Commitment","","Outstanding","","Available"],["U.S. Floorplan Line (1)","","$","1,396.0","","","$","243.1","","","$","1,152.9"],["Acquisition Line (2)","","349.0","","","341.1","","","7.9"],["Total revolving credit facility","","1,745.0","","","584.2","","","1,160.8"],["FMCC facility (3)","","300.0","","","19.5","","","280.5"],["Total U.S. credit facilities (4)","","$","2,045.0","","","$","603.7","","","$","1,441.3"]]
[[/GREPCENT_TABLE]]

(1)The available balance at December 31, 2021, includes $268.6 million of immediately available funds. The remaining available balance can be used for inventory financing.

(2)The outstanding balance of $341.1 million is related to outstanding letters of credit of $12.6 million and $328.5 million in borrowings. The borrowings outstanding under the Acquisition Line included $282.0 million of USD borrowings and £35.0 million of GBP borrowings translated at the spot rate on the day borrowed, solely for the purpose of calculating the outstanding and available borrowings under the Acquisition Line in accordance with the Revolving Credit Facility. The available borrowings may be limited from time to time, based on certain debt covenants.

(3)The available balance as of December 31, 2021, includes $3.3 million of immediately available funds. The remaining available balance can be used for Ford new vehicle inventory financing.

(4)The outstanding balance excludes $268.4 million of borrowings with manufacturer-affiliates and third-party financial institutions for foreign and rental vehicle financing not associated with any of our U.S. credit facilities.

We have other credit facilities in the U.S. and the U.K. with third-party financial institutions, most of which are affiliated with the automobile manufacturers that provide financing for portions of our new, used and rental vehicle inventories. In addition, we have outstanding debt instruments, including our 4.00% Senior Notes, as well as real estate related and other debt instruments. Refer to Note 14. Debt in our Notes to Consolidated Financial Statements for further information.

Covenants

Our Revolving Credit Facility, indentures governing our senior notes and certain mortgage term loans contain customary financial and operating covenants that place restrictions on us, including our ability to incur additional indebtedness, create liens or to sell or otherwise dispose of assets and to merge or consolidate with other entities. Certain of our mortgage agreements contain cross-default provisions that, in the event of a default of certain mortgage agreements and of our Revolving Credit Facility, could trigger an uncured default.

As of December 31, 2021, we were in compliance with the requirements of the financial covenants under our debt agreements. We are required to maintain the ratios detailed in the following table:

[[GREPCENT_TABLE]]
[["","As of December 31, 2021"],["","Required","Actual"],["Total adjusted leverage ratio"," 5.50","2.03"],["Fixed charge coverage ratio"," 1.20","6.10"]]
[[/GREPCENT_TABLE]]

Based on our position as of December 31, 2021, and our outlook as discussed within Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations to this Form 10-K, we believe we have sufficient liquidity and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with our debt covenants.

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Refer to Note 13. Floorplan Notes Payable and Note 14. Debt in our Notes to Consolidated Financial Statements for further discussion of our debt instruments, credit facilities and other financing arrangements existing as of as of December 31, 2021.

Stock Repurchases and Dividends

Our Board of Directors from time to time, authorizes the repurchase of shares of our common stock up to a certain monetary limit. As of January 1, 2021, we had $168.7 million available under our share repurchase program. From January 1, 2021, to November 17, 2021, we utilized $84.8 million of the then-available authorized share repurchase program. On November 17, 2021, our Board of Directors increased the authorization to repurchase shares of our common stock by $116.1 million to $200.0 million. From November 18, 2021, to December 31, 2021, we utilized $125.7 million of the available share repurchase program, leaving $74.3 million available under our current authorization to repurchase shares of our common stock. During 2021, 1,103,417 shares were repurchased at an average price of $190.82 per share, for a total of $210.6 million.

During 2021, our Board of Directors approved quarterly cash dividends per share on all shares of our common stock totaling $1.33 per share, which resulted in $23.2 million paid to common shareholders and $0.7 million to unvested RSA holders.

Future share repurchases and the payment of any future dividends are subject to the business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, covenant compliance, current economic environment and other factors considered relevant.

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